The dream of a Jewish and democratic state cannot be fulfilled with permanent occupation.

WHITEHOUSE: Moment of Opportunity: American Diplomacy in the Middle East & North Africa | The White House

But a continued Israeli presence in the West Bank is inconsistent with long-term dreams of a secure Jewish and democratic state, Obama said.

CNN: Obama announces 'new chapter' in U.S. Mideast diplomacy

We will continue to make clear that only through direct negotiations between the parties can the Palestinians and Israelis address all the permanent status issues that need to be addressed, and achieve the peace that they both deserve: two states for two peoples with a sovereign, viable and independent Palestine, living side by side in peace and security with a Jewish and democratic Israel.

WHITEHOUSE: Press Briefing